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On multimarket collusion and trade policies

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  • Sikdar, Shiva

Abstract

We analyze the impact of strategic government policies on trade and welfare when an international duopoly sells differentiated products in geographically-separated markets, and cross-hauling incurs a transportation cost. We compare competition between firms to multimarket collusion. In contrast to no-policy settings, where trade volumes are lower under collusion than under competition, with strategic trade policies, the volume of trade is lower under competition. Collusion increases trade, resulting in higher welfare relative to competition.

Suggested Citation

  • Sikdar, Shiva, 2023. "On multimarket collusion and trade policies," Economics Letters, Elsevier, vol. 233(C).
    • Handle: RePEc:eee:ecolet:v:233:y:2023:i:c:s016517652300455x
    DOI: 10.1016/j.econlet.2023.111429
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    References listed on IDEAS

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    1. Alan Asprilla & Nicolas Berman & Olivier Cadot & Mélise Jaud, 2019. "Trade Policy And Market Power: Firm‐Level Evidence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(4), pages 1647-1673, November.
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    More about this item

    Keywords

    Multimarket collusion; Cross-hauling; Strategic trade policy; Tariffs; Differentiated goods;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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